Oil edges higher on last-minute turnaround

Saudis concerned about oil prices while the Chinese consume less

SarahTurner

SAN FRANCISCO (MarketWatch) — Crude futures on Monday staged a last-minute comeback, ending modestly higher as traders weighed evidence of lagging demand for the commodity in China and the likelihood of potential stimulus in the United States.

Investors also parsed out comments by Saudi Arabia’s oil minister that supply and demand fundamentals do not justify the current high price of oil.

In the absence of key macroeconomic reports and ahead of the U.S. Federal Reserve’s meeting and the supplies report later in the week, there was “lack of commitment” from traders, according to Matt Smith, an analyst with Summit Energy.

Crude futures for October delivery
CLV2
advanced 12 cents, or 0.1%, to $96.54 a barrel on the New York Mercantile Exchange. Oil traded as low as $95.34 a barrel earlier.

That was oil’s highest settlement in two weeks and the fourth consecutive day of gains.

Low labor-force rate for men

(3:43)

For men, the August participation rate in the labor market was 69.8%. That's the lowest on record.

Investors “are trying to balance up if the economic picture is bad enough to justify” more stimulus by the Fed, Smith said.

Big price moves in either direction are unlikely until the market sorts out that equation, and the lack of data on Monday only exacerbated that lack of conviction, he added.

Oil on Friday ended nearly 1% higher on hopes the poor U.S. jobs report would hasten easing. On the week, however, prices were flat. Read more on Friday's oil action.

Earlier Monday, Saudi oil minister Ali al-Naimi said Saudi Arabia is concerned about the rising price of oil, not supported “by market fundamentals,” a statement published by the official Saudi Press Agency said.

“Saudi Arabia will, as always, take all necessary steps to ensure the market is well supplied and to help moderate prices — and we will meet any additional demand from our customers,” Naimi remarked in the statement. The country is the world’s top exporter of crude.

Naimi’s statements were unlikely to make big waves in the market, however.

“The Saudis are overproducing as it is. It is not a big shocker to the market. … It is safe to say the Saudis are doing what they need to do,” said Stephen Schork with the Schork Group.

In China, among the world’s top consumers of oil, demand decreased sharply. Oil imports declined 12.5% in August from a year ago, and imports dropped nearly 16% from last month to 4.35 million barrels per day, their lowest since October 2010.

“In recent years, China has been mainly responsible for the growth in global oil demand, so there is a risk that demand prognoses will be revised further downward,” analysts at Commerzbank wrote in a note.

The U.S. Energy Information Administration, the International Energy Agency and the Organization of the Petroleum Exporting Countries will release their monthly forecasts later in the week.

“Hopes of [a third round of quantitative easing] are likely to push the oil price upward nonetheless, albeit with the hand brake engaged,” the Commerzbank analysts said.

A higher dollar and a lower U.S. equities also kept oil and other commodities under pressure. U.S. stocks were mildly lower on Monday. Read more about equities.

The ICE dollar index
DXY, +0.03%
which measures the greenback against a basket of six other currencies, rose to 80.395 from 80.249 in late North American trading Friday. Read more on dollar.

Elsewhere in the energy complex, October gasoline
RBV2
rose less than 1 cent, or 0.2%, to settle at $3.02 a gallon. That was gasoline’s highest finish in a week.

October heating oil
HOV2
gained 2 cents, or 0.6%, to finish at $3.17 a gallon. It was heating oil’s highest settlement in a little over a week.

Natural gas for October delivery
NGV12
turned higher, up 13 cents, or 4.9%, to $2.81 per million British thermal units. It snapped a three-day losing streak for natural gas.

The gains are likely “bargain-hunting” after last week’s declines, said Tim Evans, an analyst with Citigroup’s Citi Futures Perspective. “Overall, the market could be in something of a holding pattern until seasonal heating demand begins to emerge.”

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information. Intraday data
delayed per exchange requirements. S&P/Dow Jones Indices (SM) from Dow Jones & Company, Inc.
All quotes are in local exchange time. Real time last sale data provided by NASDAQ. More
information on NASDAQ traded symbols and their current financial status. Intraday
data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. S&P/Dow Jones Indices (SM)
from Dow Jones & Company, Inc. SEHK intraday data is provided by SIX Financial Information and is
at least 60-minutes delayed. All quotes are in local exchange time.